Chamber and committees

Yes. It will be interesting to see what is included in the £28 billion and whether that will be linked to inflation. The figure was £28 billion when the policy was announced. Will that money be worth the same in real terms in year 5? What pace will things progress at?

Thank you very much for your evidence today, gentlemen. As always, it has been really helpful.

We will be taking evidence from the SFC next week. Is it your view that there are likely to be tens or hundreds of millions of pounds of additional expenditure in the years ahead?

I am thinking about the impact on capital. Capital inflation is running higher than resource inflation, yet the GDP deflator is predicted to grow by only 5.5 per cent over four years. That seems to be nonsense. Anyone who wants to get a house built or a road patched and goes out to tender will not be quoted a 5.5 per cent increase over the next four years, will they? Surely there should be a much more realistic look at how inflation is impacting on capital in particular.

I am thinking about looking in the round and looking not at individual projects but at capital procurement, which is a huge aspect of UK public spending relative to the same projects on the continent.

Does Mr Hughes or Professor Miles have any final comments? Are there are any areas that you feel we have not touched on that you want to emphasise?

We move on to the second part of our evidence session on the UK autumn budget statement and the wider UK context. We are joined remotely by Carl Emmerson, deputy director, and David Phillips, associate director and head of devolved and local government finance at the Institute for Fiscal Studies. Good morning, and I welcome you both to the meeting. I am glad to see that you are sitting together; that should make life a wee bit easier.

I will start where we left off. I quoted Paul Johnson’s response to the autumn statement to witnesses from the OBR, who gave evidence just a few moments ago. Professor Miles said that he thought that the IFS was being “somewhat pessimistic” in its outlook. What is your view on that?

I thought he might be.

What are the implications of that for the Scottish budget?

My final question is effectively from the IFS.

Paul Johnson has said that the chancellor

“or his successor is going to have the mother and father of a headache when it comes to making the tough decisions implied by this statement in a year or two’s time.”

What do you feel that the statement means in the medium to long term for the UK economy, and what might the knock-on effects be for Scotland’s economy?

The historic tax burden is 37.7 per cent, which is, I think, the highest that it has been since the second world war. Professor Miles, do you want to come in?